Pension bond, health care costs, new positions drive up proposed Quincy budget by $26 million

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QUINCY – Mayor Thomas Koch has requested a 7.7% spending increase for the next fiscal year to pay for an operating budget he said "really reflects the value of our community."

The mayor on Monday presented a $372.7 million budget to city councilors that includes $120 million for the school department and $69 million for public safety operations. The budget proposed for the fiscal year that starts July 1 is a stark increase over the current year's budget, which came in at $346.6 million.

Quincy Mayor Thomas Koch congratulates Mike Leith, of Quincy, who was honored during halftime of the North Quincy/Quincy basketball game on Friday, Jan. 21, 2022.
Quincy Mayor Thomas Koch congratulates Mike Leith, of Quincy, who was honored during halftime of the North Quincy/Quincy basketball game on Friday, Jan. 21, 2022.

"By working together, we have a quality of life second to none in the commonwealth," Koch told city councilors. "I am constantly asked, 'Why are we doing so much? Wait.' Wait for what? ... I believe we are preparing this city to be left better than we found it."

The budget increase is so large, Koch said, in part because the last two years were kept "very lean" due to economic uncertainty during the coronavirus pandemic. He said local receipts including building fees, meal taxes, hotel taxes and excises taxes are increasing; state aid is up; and the city expects revenue from the newly city-run Furnace Brook Golf Club to offset some costs.

The fiscal 2023 budget includes funding for five new police officers.
The fiscal 2023 budget includes funding for five new police officers.

Koch said the majority of the 7.7% increase is largely related to health care cost increases, wage increases for city and school employees and the second year of incorporating debt service for a $475 million pension obligation bond approved in 2020.

The city borrowed $475 million over a 30-year bond period to pay down the city's pension obligation, which was at the time an outstanding liability. The bond exchanged the old system of paying down the pension fund – in which the city's retirement board essentially sent a bill at the start of each budget season – for a bond financing plan that funded the pension system all at once.

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This year, the city will pay $15.6 million toward the bond, $6 million more than last year. Koch said he expects that number will continue to increase for two more years, then level off for the lifetime of the payback period.

"We've got a little more on the debt side coming for the next few years, but over time, I believe, looking back at this, it will be a decision that is lauded for many years to come," he said.

Adding teachers, police officers and more

Also included in this year's budget is an additional $3.5 million for the school department to hire new teachers, which will be paid for by increases in state education funding. The budget adds five new police officer positions; $600,000 in capital investment money for the public buildings department; a community liaison for the mayor's office to handle equity and diversity efforts; and several other positions including a food inspector, four part-time library employees and a building inspector.

An additional $6 million has been set aside to pay for wage adjustments for city employees. All of the city's employment contracts are set to expire this year.

The majority of the city’s budget is funded by property taxes, with state aid and local receipts covering the rest. Tax rates are set for the calendar year but the city’s budgetary year goes from July 1 to June 30.

The city decides its tax rates each December by figuring out how much money it will need to fund the budget over the fiscal year’s final six months, and works backward from there to find the rate needed for that.

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Such a large increase in the budget will likely lead to an increase in property taxes this fall. Koch said the city historically has not taxed residents as much as it could, and even accounting for the increase in spending will still have tens of millions of dollars in excess levy capacity.

Chris Walker, chief of staff to Mayor Thomas Koch, said the fiscal 2023 budget will be available Tuesday on the city's website.

City councilors did not discuss the budget Monday but will instead hear from city department heads during a series of finance committee meetings in the coming weeks. City councilors can cut money from the mayor's spending plan, but cannot add to it. The budget must be returned to the mayor's office with all cuts finalized by mid-June.

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This article originally appeared on The Patriot Ledger: Quincy Mayor Thomas Koch proposes $372.7 million operating budget